OUTSOURCING GOVERNMENT SERVICES

Zawn Villines

Public-Private Partnership: A Win-Win for Cities and Engineering Firms I

It had been more than 50 years since a new city had been created in Georgia when the City of Sandy Springs came into being in 2005. There were no models for how to get one up and running that could be applied. Fortunately, Oliver Porter had an idea.

Oliver Porter is an engineer, artist and somewhat of a visionary. Porter believes that smaller governments that are closer to the people offer citizens more opportunities for engagement and input and greater government accountability. Porter had a vision for the City of Sandy Springs designed to minimize the sort of bureaucracy that would create barriers to direct citizen engagement. Critical to this vision was the idea of privatizing government services.

It wasn’t an entirely new idea, but it’s an idea that caught on here in Georgia and across the globe. Almost every new city created in Georgia since 2005 has followed the Sandy Springs model by outsourcing some or all of their government services. Even long-established cities and counties have incorporated outsourcing into their service delivery models. And engineering firms have been central to this process.

THE CITYHOOD MOVEMENT AND OUTSOURCED GOVERNMENT SERVICES: CLOSE ALLIES

If you were to ask almost anyone to share their complaints about government, you’d probably hear a litany of gripes about bureaucracy and slow services. Prior to 2005, the community of Sandy Springs was no different. Back then, Sandy Springs was an unincorporated area in the northern part of Fulton County. Residents complained about slow and inefficient services, and about their high tax burden that was not justified by the poor-quality of services they were receiving.

Dissatisfaction with the government services they were receiving from Fulton County was a key reason for many residents who were in favor of incorporation and the intent to outsource many of those services was part of the cityhood campaign.

In 2005, residents of Sandy Springs voted 94% in favor of incorporating their new city, which became the third largest area in the country ever to do so. The City’s leaders, Oliver Porter included, immediately announced their plan to run their city differently. Rather than a large, impressive city hall complex and staff to go with it, the City of Sandy Springs would run a slimmed-down operation that placed a premium on efficiency. The key ingredient in the recipe? Outsourcing.

CH2M (now Jacobs) was the engineering firm tasked with providing all city services. Ashley Jenkins was elected to serve on the first Sandy Springs City Council, and she described the challenge the city faced, stating that they “could not have stood up the city without the expert advice and leadership from our partners at CH2M. From process management to traffic engineering to building permits, they were on top of it all. We were successful because of their hard work behind the scenes.”

But beyond merely providing the services, CH2M/Jacobs also provided data on how well those services were being provided, and at what cost. As Jenkins put it, “they provided dashboards and metrics so we could properly budget and track where we were year over year to make progress in the areas that needed it most.”

This now-familiar model of public-private partnerships quickly gained national attention. Proponents of cityhood generally, and privatization specifically, hoped that Sandy Springs would provide a compelling case for a shift away from large full-time staffs and top-heavy city government infrastructures.

Every year when contracts were rebid, the City of Sandy Springs would ask a crucial question: do public or private contracts offer the greatest value for the lowest cost?

Along with the legislation creating Sandy Springs, a number of legislative changes were made to make it easier to incorporate new cities, and Sandy Springs’ success unleashed a torrent of new cityhood ballot measures. Cities such as Dunwoody, Milton, Johns Creek, Brookhaven and Peachtree Corners promised residents better services and better stewardship of taxpayer dollars via incorporation. For many resident, outsourcing some government services to private contractors was a key selling point.

For example, Johns Creek has maintained streamlined operations by outsourcing public works to Jacobs Engineering. Outsourced contracts also operate its right-of-way and stormwater systems, parks, and traffic operations.

Dunwoody outsources various contracts too, including to The Collaborative, an urban planning and design firm that supports the City’s planning, zoning, and code enforcement.

Milton outsources a variety of city planning services on an as-needed basis, sending contractors to building inspections, to oversee zoning issues, and to review building and other development plans.

Brookhaven allows contractors to directly bid on a variety of contracts on its website. It lists the details of each awarded contract directly on the website, so the public can easily view project costs and progress.

WHY OUTSOURCE PUBLIC SERVICES?

The outsourcing model allows cities to cast a wide net, seeking national or even international talent to solve familiar challenges.

“This model provides lower costs, higher performance and greater accountability by outsourcing most departments to the private-sector service providers,” said City Manager Eric Linton in his September 2021 newsletter.

For some advocates of small government, outsourcing public services is all about saving money. Outsourcing, though, has also drawn the support of those who believe it creates greater accountability, improved services, and a more manageable city staff.

City leaders cannot be experts in all things. Outsourcing allows them to find and hire the real experts, and renew their contract only if the contractor delivers in full on the promised services.

A competitive bidding process with local accountability incentivizes good work from contractors. When city employees do the work, addressing performance issues may expend significant HR resources as managers implement performance improvement plans or seek to overhaul entire departments. Without a competitive process in place, transparency into the actual cost of a service as compared against the value it delivers is challenging.

Public-private partnerships prioritize results, and can drive innovation that may ultimately spread to other cities. Once a firm wins a contract, it has freedom to implement the contract based on its own expertise, rather than on political considerations. There is no bloat, no department heads to consult, and no need to waste time on bureaucratic red tape or resistance to change.

Defining success for these contracts is crucial to realizing their promised benefits. Each city has devised its own solution for keeping the process competitive and accountable.

The Sandy Springs model awards contracts to multiple firms, using a “ranked runner-up” system. If the first contract recipient does not meet standards, the City can transition to a different contractor without going through the rebidding process.

In Dunwoody, the City can begin the search for a new contractor even while under an existing contract with a different firm.

Opponents of cities have expressed concern about keeping outsourced work transparent. The leaders of the cityhood movement insist that outsourcing is actually more transparent, because cities have a strong interest in clear oversight. The relatively small size of most of the newer cities may also mean more engaged citizens who put pressure on contractors (and the elected officials who award the contracts) to deliver what they promise.

Those citizens have the right to access most contracting documents and budgets. Even when a government hires a private firm to do a job, the records associated with that job are covered under Georgia’s Open Records Act, which requires that governments allow members of the public to view almost all government documents. These open records generally include budgets, contracts, emails and other communications about outsourcing projects, meeting minutes, and more.

Georgia’s Open Meetings Act lends an additional layer of transparency. Most government meetings, including those about outsourced contracts, must be open to the public, and advertised in compliance with state law.

Georgia law prohibits outsourcing certain services, including police and fire. So even in the most pared down cities, these operations remain consistently under the control of local leadership.

THE BENEFITS TO ENGINEERING FIRMS OF OUTSOURCING

Engineering firms can offer a wide range of outsourced services. Jacobs, a leader in global engineering, has contributed to many local projects. Jacobs acquired CH2M Hill, which oversaw many of the earliest city engineering contracts, in 2017.

Following the incorporation of Johns Creek in 2006, surveys showed that residents’ biggest concern was traffic. Jacobs developed a traffic control system linking 72 traffic signals to a single control center.

According to the U.S. Department of Transportation Federal Highway Administration, badly timed traffic signals are a major contributor to road congestion. Reconfiguring these signals is one of the most cost-effective ways to reduce traffic slowdowns.

Jacobs reports that many cities across the nation have installed such traffic systems, but these systems often fail to realize their promised benefits because the right people do not oversee them. The timing of the signals remains outdated or inefficient, potentially exacerbating rather than improving traffic frustrations.

Things work differently in Johns Creek. Jacobs engineers actively oversee the traffic signals, making continuous improvements based on actual traffic patterns. As a result, traffic congestion has steadily improved in this highly populated region.

Due in part to these traffic improvements, The Georgia Section of the Institute of Transportation named the Johns Creek Public Works Department Agency of the Year in 2018.

Cities face complex challenges, especially as they recover from the pandemic. Traffic, crime, climate concerns, and public health all figure prominently in the minds of city leaders and citizens. Engineering firms can innovate creative solutions to these challenges.

Small cities offer fertile soil in which to plant and test out new solutions. When they succeed, other cities may adopt these innovations, improving quality of life in an entire region. When projects fail, the mandate to perform to the standards of the contract incentivizes engineers to keep trying until they find something that works. The failure itself can be beneficial, offering guidance to other cities, and for future projects.

IS THE OUTSOURCING TREND WANING?

Outsourcing can save taxpayer dollars—a strong selling point, especially as a recession looms. Outsourcing, though, doesn’t always lower costs in absolute terms. Even Sandy Springs has elected to bring some services in-house since 2019.

“In this [reassessment of contracts], the gap between private sector prices and in-house costs for these services was such we cannot justify the difference,” Mayor Rusty Paul said in a press release at the time. “We frequently compare the private sector offerings we receive with the in-house cost of delivering services and have elected in the past to rely on the private sector due to cost, flexibility and innovation.”

Nevertheless, Sandy Springs continued to keep several contracts privatized. Public works field services, the city attorney’s office, the municipal court and solicitor’s offices, and 911 services all remain outsourced.

A 2017 Library Systems and Services survey found that 53% of citizens believe that outsourcing some government services is “mainly a good thing.” And while respondents reported generally favorable opinions of local government services, favorability rates were generally lower for those services that governments are most likely to outsource. Respondents also expressed skepticism about government’s ability to report on and constrain administrative costs for services such as libraries.

Engineering firms can continue to adapt to new trends, keeping costs under control and demonstrate their ability to be responsive to the needs and concerns of citizens and government officials. As Deyanna Respress, Manager of Projects, Municipal Services at Jacobs puts it “engineers are trained problem solvers and working with local governments requires quick problem-solving skills and innovative solutions.”

The opportunity to innovate remains and local governments can be the beneficiaries of those creative solutions. As the leaders of Georgia’s recent cityhood movements continue to learn, adaptation to changing needs is the key to success.